Foolish analysts often own shares of companies they recommend, but not always.
The absence of a stock from an analyst’s personal holdings doesn’t indicate a lack of conviction in it. Our analysts are normal people juggling their own portfolios and personal finances and, just like you, we Fools don’t have unlimited funds to invest.
If a Fool analyst’s personal portfolio is already loaded with, say, high-tech doohickey manufacturers, buying shares of the service’s latest recommendation, Spacely Sprockets (Nasdaq: JETS), might end up overweighting that industry for the analyst.
And selling a stock doesn’t necessarily indicate a lack of belief in a company. A Foolish analyst might need to cash out to make a downpayment on a house or pay the kids’ tuition.
Zooming out, remember that no one has more riding on a recommendation than the analyst that made it. Our analysts put their reputations (and careers) on the line with each recommendation they make — every pick we make is tracked and made available for all to see. Let’s just say that poor performance is bad for business, and as Fool employees, we are all investors in our business.
Bottom line: we succeed when you succeed!